The international coffee market has experienced unprecedented volatility in recent years. In 2024, Arabica coffee prices started at 177 cents per pound (c/lb), but in the first months of 2025, they surpassed 400 c/lb, reaching historic levels. While this increase may seem positive at first glance, it has created significant challenges for producers, cooperatives, and exporters in coffee-producing countries. In this article, we explore the causes of this volatility, its impact on the supply chain, and the strategies ElevaFinca is implementing to support producers in this complex context.
Current State of the C Market: Key Drivers of Price Increases
The recent surge in coffee prices is due to a combination of factors affecting global production and distribution:
1. Reduced Production:
Countries like Peru and Honduras have reported a 15% smaller harvest compared to the previous year. Additionally, the harvest has been concentrated in a shorter time frame, leading to internal competition for financing and supply.
In Colombia, logistical issues, such as container shortages, have hindered exports, as detailed in ElevaFinca’s article on "Overcoming Container Shortages in Colombian Coffee Shipments".
The harvest in Brazil, the world’s largest producer, is expected to be less abundant in 2025, which could keep prices high.
2. Climate Factors:
Adverse weather conditions, including excessive rains, droughts, and frost, have impacted the quality and quantity of production in several countries.
3. Speculation in Financial Markets:
Investors have bet on coffee as an attractive commodity, exacerbating price volatility.
Impact on Cooperatives: Challenges in a Volatile Market
The rise in C Market prices has left many producers in a difficult situation:
1. Limited Financial Management:
Volatility has made it harder to access financing, increasing the cost of inputs such as fertilizers and labor. Additionally, many cooperatives have faced financial planning issues, worsening the situation.
2. Logistical Challenges:
Container shortages and port delays have disrupted deliveries and payment flows, affecting cooperative operations and limiting their purchasing capacity.
3. Fragile Governance:
Price fluctuations and financial problems have strained the relationship between cooperatives and their member producers. Some producers have chosen to sell outside their organizations, undermining the cooperative model and loyalty to their organizations.
4. Climate Factors and Concentrated Harvest:
The short and concentrated harvest has driven up internal prices in producing countries, leaving many cooperatives without purchasing options much earlier than expected and facing historically high prices.
These issues, combined with poor decision-making, can lead to shipment delays and affect the sustainability of producer organizations.
ElevaFinca’s Strategy: A Holistic Approach to Reducing Commercial Risk
At ElevaFinca, we are developing a comprehensive strategy to support producers and cooperatives in this challenging environment:
Increased Financing Options:
We have expanded working capital options, primarily for our 4 processing plants, to ensure adequate cash flow and support producers in purchasing from partner organizations, guaranteeing traceability.
Technical Harvest Evaluation:
We will implement production monitoring tools, optimizing planning and reducing risks, leveraging the expertise of our field technicians in Peru, Colombia, and Honduras. This allows us to anticipate challenges and make informed decisions.
Commercial Intelligence:
We are strengthening our analytical capacity to provide timely and accurate information on international markets, helping producers make more strategic commercial decisions.
Governance Programs:
We work with cooperatives to strengthen their internal structures and maintain the trust of their members. This includes training and support in financial and operational management.
Our goal is not only to mitigate the effects of market fluctuations but also to build a more sustainable and resilient model for the coffee sector.
The rise in C Market prices has created a complex scenario for coffee-producing countries. However, at ElevaFinca, we believe that with the right support, producers can overcome these challenges and seize the opportunities offered by a growing market. We will continue working alongside our partner communities to ensure that high-quality coffee reaches consumers worldwide while promoting sustainable and equitable practices.
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